Editor Urges Flexibility In Business's Approach

When Alan Kantrow thinks high-technology, he could be thinking of International Business Machines or American Telephone & Telegraph.

Or he could be thinking of Bethlehem Steel Corp. and Mack Trucks.

To Kantrow, senior editor of The Harvard Business Review, the point is that the idea of "high-technology," like many other assumptions concerning the business world, has to be reconsidered.

Kantrow was in Bethlehem yesterday to offer the keynote speech for a two- day conference on "Managing Change: Technological and Human Strategies." The conference is being sponsored by the Eastern Pennsylvania Chapter of the American Society for Training and Development, the North East Tier Ben Franklin Advanced Technology Center and Northampton County Area Community College.

In his speech and an interview yesterday with The Morning Call, Kantrow wound through a list of issues affecting the world and the Lehigh Valley economy, including the steel industry and how major steelmakers might become competitive again, Mack Trucks' decision to move its manufacturing plant to South Carolina and how to possibly prevent more such moves and protective quotas.

Kantrow said his views are not really iconoclastic; he called them "common sense.

"The idea that high-tech alone is going to save the world," he said, "is nonsense. Who is going to buy what high-tech makes?"

He said major heavy manufacturers, such as automobile and steel makers, always have been the innovators in applying high technology. It would be preposterous to encourage and cultivate high-technology manufacturers and disregard a Bethlehem Steel, Kantrow said.

He also said "it is absolutely the wrong case" for people to believe that labor costs in general make up the greatest part of the cost of all heavy goods. Fifty years ago, labor might have accounted for 75-80 percent of the cost of an item. Today, those costs might be 8-12 percent, depending on the industry, he said.

Kantrow said efficiency can be improved by realizing that "90-95 percent of the time that steel (beam) is in the plant, nobody is doing anything to it, or rather, it's not being done to, it's not being worked on."

Further, bringing new technology to any business requires people with the ability to apply, use, monitor, repair and maintain that technology. In other words, he said, as machines increase in sophistication, "The skill requirements of the people that use the machine . . . escalate.

"What this says to management and labor alike," he said, "is that the old deals no longer apply."

In his speech, Kantrow said that, if businesses are to survive today, they should accept the fact that the search for improvement must be ongoing. No static goals in this theory can be accepted; in fact, the old method of setting a goal, reaching it and "collecting the economic rent" means "absolute death" in today's rapidly changing marketplace, he said.

The terms of business competition are constantly evolving, Kantrow asserted. And by accepting the goal of establishing no fixed goals, businesses have less time to reap the return on their investments.

"What you win," he said, "is the chance to run another lap."

Kantrow also praised the Japanese management techniques that helped change consumers' conceptions about Japanese products. "Do you remember when 'made in Japan' meant crap?" he asked.

He said the drive to be innovative and improved led Sony to the development of the hugely successful Betamax video cassette recorder, even though it had to be introduced in the marketplace four times. Kantrow asked rhetorically if most American companies would be willing to submit a product to the marketplace again if it failed once.

This challenge of making "innovation the primary mode of competition" requires today's managers to "be more than willing to be eager and committed to forcing change before circumstances require it of them. It also requires them to view workers not just as a "cost center to be bled out," but as a human resource, he said.

Kantrow, in the interview, admitted labor has to understand that it must accept pay increases only for increases in productivity and performance. On the other hand, management must do what is necessary for laborers to be able to work creatively and productively.

That means cross-training employees in various skills, continuous education and elimination of outmoded work rules, he said.

Regarding Mack's move to South Carolina, Kantrow said that in general, "I simply don't believe" that wage and benefit costs are the only reasons a company would want to move to the Sun Belt.

"That's what we all fasten on,"Kantrow said. "The real question is: What is it the other environment offers that is so attractive?"